Am I obliged to pay for services not done or not told about before/during construction?

Hi, we are in a situation where work has been completed for our home. It is a large project and the outcome is a great new landscaped front, side and back of my home. The quality of work is very good actually.

The challenge is that there were two critical items which were not made, and when we brought this to the contractor, they said that I have to pay in full. When we advised them that we can't pay for something that wasn't done, they were still adamant that we have to pay the last 10% of the balance remaining.

We refused, and said that we will pay you what is due, less the unfinished items. The truth is we can live with out the two items that were not completed.

We even added an extra item to an existing part of the quote, and we calculated that into the last 10% owed, and that was agreed to via text message.

The contractor still insisted that we pay in full, and we refused. During our back and forth, the contractor reveals that they incurred additional costs on a part of the project that was not part of the quote, yet detailed measurements were made. We were never made aware of this additional cost before they began demolition. They also, stated they would bill us for another part of the project where we were told that it would not incur an additional cost. These two new costs were never discussed before nor during construction and were only brought up when we challenged the balance outstanding.

We have paid the balance owning, less the two parts of the project that was not done. Yet, they still insist on us paying the balance of the two new items we had know idea about and refuse to remove the cost of the two items which were not built.

Our next door neighbour hired them to do similar work on their house, so our two projects are happening at the same time, and the contractor is also demanding the final 10%, yet there's property damage that was caused by their machinery to the home and also sub part quality in the materials used in parts of the project. The contractor is only responding with a demand for the final payment, and doesn't even acknowledge the property damage nor replacement of the defected material.

This is a well known company that has provided construction projects around our neighbourhood. I'm sure this contractor will either send a collections agency to our door, or register a lien against our property.

Our deal for this project was an all cash job and they also threatened to charge us interest for the amount they feel is still outstanding.

We're pretty honest people and don't take advantage of folks nor want others to do the same to us, but it makes me wonder if 'WE' did something wrong here.